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EXHIBIT 10.19
[AQUA-CHEM, INC. LETTERHEAD]
XXXXXXX X. XXXXXX
Chairman and Chief Executive Officer
December 17, 1997
Xx. Xxxxxxx X. Xxxxxxx
000 X. Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxx 00000
Dear Xxxx:
This letter will set forth our agreement in connection with your
serving as a member of the Board of Directors (and any Committees thereof) of
Aqua-Chem, Inc. ("AQM"). The arrangements set forth herein shall be effective as
of August 1, 1997 and shall continue in effect for so long as you continue to be
a director. In that regard, nothing contained herein shall obligate you to
continue to serve as a director of AQM for any specific period or term or confer
upon you any right to continue to serve as a director of AQM for any specific
period or term. Accordingly, AQM by majority vote of its Stockholders or Board
and you each have the right to terminate your being an AQM director at any time.
Cash Fee.
For so long as you are a member of the Board of Directors, AQM will pay
you Two Thousand Five Hundred Dollars ($2,500) on the first day of November,
February, April and July of each year. Simultaneous with your acceptance of the
terms set forth herein, AQM will pay you Two Thousand Five Hundred Dollars
($2,500), representing payment due on November 1, 1997.
Indemnification Agreement.
AQM hereby confirms that the Indemnification Agreement (a copy of which
is attached hereto) between you and the predecessor to AQM, which was merged
into AQM on July 31, 1997, shall continue in full force and effect and, in
accordance with its terms, shall continue to apply to liabilities or obligations
incurred as a director of AQM as well as its predecessor.
Grant of Options.
Effective as of August 1, 1997 and effective as of each August 1
thereafter for so long as you are a member of the Board of Directors, AQM hereby
grants you an option (subject to the vesting and anti-dilution provisions
hereinafter set forth) to purchase six hundred (600) shares of $.01 par value
common stock of AQM (hereinafter respectively referred to as the "Options" and
the "Stock") at a price of Three and 75/100 Dollars ($3.75) per share, which
shall be payable in full upon exercise of the Option. Except as hereinafter set
forth in the next paragraph, all Options granted hereunder shall expire and
terminate on August 1, 2007. Options granted hereunder are so called
Non-Qualified or Non-Statutory Options and do not constitute Incentive Stock
Options
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EXHIBIT 10.19
within the meaning of Section 423 of the Internal Revenue Code. You shall be
responsible for any and all taxes due in connection with the grant or exercise
of the Options and/or the subsequent sale or other disposition of Stock acquired
pursuant to the exercise of the Options. Options shall be exercised by written
notice addressed to AQM accompanied by a check for the full purchase price. As a
condition precedent to the exercise of any Option, AQM reserves the right to
require you to represent to it that such exercise is for investment only and not
with a view to distribution and such other matters as may be necessary to comply
with applicable laws or regulations. If at any time the Board of Directors of
AQM in its sole discretion determines that the listing, registration, or
qualification of shares of Stock issuable hereunder on any securities exchange
or under any state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of, or in
connection with the issue, transfer or purchase of Stock, the Options granted
hereunder may not be exercised in whole or in part unless such listing,
registration, qualification, consent, or approval shall have been effected or
obtained free of any conditions not acceptable to the AQM Board. The granting of
the Options shall not confer any rights as a stockholder unless and until an
Option is validly exercised and a certificate issued. Nothing contained herein
shall confer any security interest or other interest in any assets of AQM and
you shall be a general unsecured creditor of AQM with respect to any amounts
which may become due you pursuant to the terms hereof.
Vesting
Options which are granted effective as of August 1 of any calendar year
shall vest and become exercisable in full on July 31 of the subsequent calendar
year. Accordingly, the Option granted effective as of August 1, 1997 shall
become vested and exercisable on July 31, 1998, the Option granted effective as
of August 1, 1998 shall become vested and exercisable on July 31, 1999 and so
forth. Notwithstanding the foregoing, in the event that prior to July 31 of any
calendar year, (a) AQM becomes a party to an agreement that contemplates the
sale of all of the issued and outstanding stock of AQM ("Stock Sale"), (b) AQM
becomes a party to a merger or consolidation agreement that contemplates that
AQM will not be the surviving corporation of the merger or consolidation
("Reorganization"), or (c) you cease for any reason to be a member of the Board
of Directors ("Termination") then, in any of such events (hereinafter referred
to as a "Triggering Event"): (a) if the Stock Sale, Reorganization or
Termination actually occurs prior to February 1 of such calendar year, the
Option granted effective August 1 of the preceding calendar year shall be null
and void and (b) if the Stock Sale, Reorganization or Termination actually
occurs on or after February 1 of such calendar year, the Option granted
effective August 1 of the preceding calendar year shall become immediately
vested and exercisable in full upon the occurrence of the Triggering Event.
Notwithstanding anything to the contrary herein (a) upon the consummation of a
Stock Sale or Reorganization all Options previously granted which have not been
exercised shall expire and terminate and (b) all Options previously granted
which have not been exercised shall expire and terminate on the ninetieth (90th)
day following a Termination.
Anti-Dilution and Administration.
Notwithstanding anything to the contrary herein, the AQM Board of
Directors (or such Committee thereof as the Board may designate) shall have the
right to and shall: (a) adjust the number of shares, the price of shares and/or
the class of shares to which the Options apply, but only to prevent the dilution
or enlargement of rights, including, without limitation, adjustments in the
event of stock dividends, stock splits, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, separations, spin-offs,
reorganizations, liquidations and the like; (b) interpret, administer and, to
the extent necessary to comply with the provisions of Section 16 of
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EXHIBIT 10.19
the Securities Act of 1934, the requirements of Rule 16b-3 and other
applicable laws and regulations, modify the provisions set forth herein. Any
such action taken or determination made in good faith by the AQM Board of
Directors or such Committee as the Board may designate shall be final and
binding.
Nontransferability of Options.
No Option may be transferred, assigned, pledged or hypothecated
(whether by operation of law or otherwise), except as provided by will or the
applicable laws of descent and distribution, and no Option shall be subject to
execution, attachment or similar process. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of an Option not specifically
permitted herein shall be null and void.
Put - Call Provisions
Upon your death or disability (as defined in Section 22 (e) (3) of the
Internal Revenue Code) and continuing thereafter at any time or times until the
consummation of an initial public offering of the Stock, (a) you, or in the
event of your death, your personal representative and/or heirs (hereinafter
referred to as the "Selling Stockholder") shall have the right ("Put"),
exercisable by written notice to AQM, to require AQM to purchase all or any
portion of the Stock acquired pursuant to the exercise of the Options and (b)
AQM shall have the right ("Call"), exercisable by written notice, to require
you, or in the event of your death, your personal representative and/or heirs
(hereinafter again referred to as the "Selling Stockholder") to sell all or any
portion of the Stock acquired pursuant to the exercise of the Options. The per
share price for the Stock purchased and sold pursuant to the exercise of a Put
or Call shall be "Market Price" as hereinafter defined. The closing of the
purchase and sale of Stock pursuant to the exercise of a Put or Call shall occur
at AQM's principal office at the date and time specified by AQM by written
notice to the Selling Stockholder, which shall be (a) not less than ten (10)
days after the date of receipt of the written notice specifying date and time of
closing and (b) not more than ninety (90) days after receipt of the initial
notice of exercise of the Put or Call. At the closing, the Selling Stockholder
shall deliver certificates duly endorsed for transfer evidencing ownership of
the Stock being purchased and sold and such other agreements as AQM may
reasonably require to confirm that it is acquiring the Stock free and clear of
any claims of any nature whatsoever, and against delivery of the same, AQM shall
pay the Selling Stockholder (by certified or bank cashier's check or wire
transfer of immediately available funds to such account as the Selling
Stockholder shall direct in writing) an amount equal to (a) the Market Price,
multiplied by (b) the number of shares of Stock being purchased and sold. As
used herein, "Market Price" shall mean the fair market value of one share of
Stock as of the date of receipt of written notice of exercise of a Put or Call
as determined by an independent appraiser (the "Independent Appraiser")
appointed by the Board of Directors of AQM. The Independent Appraiser shall be
appointed within ten (10) days of receipt of written notice of exercise of a Put
or Call and shall be instructed to complete the valuation within thirty (30)
days after appointment. The Selling Stockholder and AQM shall execute such
agreements as the Independent Appraiser shall require. The fees and expenses of
the Independent Appraiser shall be paid by AQM and the determination of the
Independent Appraiser shall be final and binding upon AQM and the Selling
Stockholder.
Right of First Refusal.
AQM shall have a right of first refusal with respect to any sale,
transfer, gift, assignment, pledge, encumbrance or other disposition of Stock
acquired pursuant to the exercise of an Option. In the event you receive a bona
fide offer to purchase or desire to sell, transfer, assign, pledge, encumber or
otherwise dispose of any Stock acquired pursuant to the exercise of an Option,
you shall deliver written notice thereof to AQM stating the terms of such
proposed sale, transfer, gift, assignment, encumbrance or disposition, which
notice shall also
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EXHIBIT 10.19
specify the number of shares of Stock involved, the price per share, if any, and
the name and address of the proposed transferee. AQM shall have the right
(exercisable by written notice to you during the thirty (30) day period
following the date of AQM's receipt the initial written notice from you) to
elect to purchase all or less than all of the shares of Stock specified in your
written notice at a per share price equal to (a) in the case of a proposed
pledge, encumbrance, gift or similar disposition, the Market Price (as defined
in the preceding paragraph and determined as of the date of AQM's receipt of the
written notice from you), or (b) in the case of a proposed sale, the lesser of
the Market Price or the price contained in the bona fide offer and specified in
your written notice. The time and place of closing and the deliveries at closing
shall be as specified in the preceding paragraph. In the event AQM does not
exercise the right of first refusal as to all of the shares of Stock specified
in your written notice, you may during the ninety (90) day period after the
expiration of AQM's right of first refusal, dispose of any shares of Stock
specified in your initial written notice which were not purchased by AQM but
only upon the terms and to the transferee specified in your initial written
notice to AQM. After the expiration of such ninety (90) day period, no shares of
Stock acquired upon exercise of an Option may thereafter be transferred or
encumbered without again complying with the provisions set forth herein. Any
attempted transfer not in compliance with the preceding provisions shall be null
and void. The right of first refusal set forth herein shall terminate upon the
consummation of an initial public offering of the Stock.
Legend.
All certificates evidencing shares of Stock acquired pursuant to the
exercise of an Option shall bear a legend as follows:
The shares of Aqua-Chem, Inc. evidenced by this certificate have not
been registered under any securities laws and may only be sold,
transferred or otherwise disposed of in compliance with applicable
securities laws. In particular, the shares evidenced by this
certificate have not been registered under the Securities Acts of 1933,
as amended (the "Securities Act") and may not be sold, transferred or
otherwise dispose of unless (1) an effective registration statement
under the Securities Act shall then be in effect with respect to such
shares, or (2) the Company shall have received an opinion of counsel
reasonably acceptable to the Company that any proposed sale, transfer
or other disposition of such shares is exempt from registration under
the Securities Act. The shares evidenced by this certificate are
further subject to a right of first refusal and call as set forth in a
letter agreement dated December , 1997, a copy of which is available
for inspection at the offices of the Company.
Miscellaneous Provisions.
Any notices required or permitted hereunder shall be sufficiently given
if in writing and personally delivered, sent by registered mail or facsimile
addressed: (a) if to you or any permitted transferee, to your address or, if to
a permitted transferee, to such permitted transferee's address, as set forth in
the books and records of AQM; or (b) if to AQM, at the principal office of AQM
clearly marked "Attention: Board of Directors". If any provision of this
agreement shall be determined to be invalid or unenforceable, such determination
shall not affect the validity or enforceability of any other provision of this
agreement and the same shall be enforced as if such invalid or unenforceable
provision had not been included. This agreement contains the entire agreement of
the parties and, except as expressly provided to the contrary herein, may only
be modified by a written instrument signed by AQM and you. This agreement shall
be governed by the laws of the State of Wisconsin and any dispute hereunder
shall be resolved in accordance with the rules of the American Arbitration
Association by binding arbitration in Milwaukee, Wisconsin, by a panel of three
arbitrators, with you and AQM each appointing one arbitrator and the two
arbitrators so appointed then appointing a third arbitrator.
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EXHIBIT 10.19
If you are in agreement with the preceding, please so indicate by
signing and returning the enclosed copy of this letter.
Very truly yours,
/s/ XX Xxxxxx
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Xxxxxxx X. Xxxxxx
Agreed to and accepted this ___ day of Decembr, 1997.
/s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
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EXHIBIT 10.19
AGREEMENT
AGREEMENT made and entered into this 21 day of June, 1996 by and between
Aqua-Chem, Inc., a Delaware corporation with principal offices in Milwaukee,
Wisconsin (hereinafter sometimes referred to as AQM) and Xxxxxxx X. Xxxxxxx
(hereinafter sometimes referred to as "Xx. Xxxxxxx").
WITNESSETH:
WHEREAS, Xx. Xxxxxxx has in the past and currently serves as a director
and/or officer of AQM and AQM desires Xx. Xxxxxxx to continue to serve as a
director;
WHEREAS, as an inducement to Xx. Xxxxxxx to continue to serve as a
director, AQM has agreed to indemnify Xx. Xxxxxxx and hold him harmless as
hereinafter set forth in this Agreement; and
WHEREAS, Xx. Xxxxxxx, in reliance upon AQM's undertakings as hereinafter
set forth in this Agreement, is willing to continue to serve as a director
and/or officer.
NOW, THEREFORE, in consideration of the premises AQM and Xx. Xxxxxxx xxxxxx
agrees as follows:
1. DEFINITIONS. As used herein, the following terms shall have the
following meanings:
(a) "Expenses" include fees, costs, charges, disbursements, attorney
fees and any other Expenses incurred in connection with a Proceeding
(as hereinafter defined).
(b) "Liability" includes the obligation to pay a judgment, settlement,
penalty, assessment, forfeiture or fine, including an excise tax
assessed with respect to any employee benefit plan, and reasonable
Expenses.
(c) "Party" includes an individual who was or is, or who is threatened
to be made, a named defendant or respondent in a Proceeding.
(d) "Proceeding" means any threatened, pending or completed civil,
criminal, administrative or investigative action, suit, arbitration or
other Proceeding, whether formal or informal, which involves foreign,
federal, state or local law and which is brought by or in the right of
AQM or by any other person.
2. MANDATORY INDEMNIFICATION.
(a) AQM shall indemnify Xx. Xxxxxxx and in the event of his death, his
estate, personal representative and heirs (hereinafter collectively
referred to as the "Indemnified Party"), to the extent that the
Indemnified Party has been successful on
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EXHIBIT 10.19
the merits or otherwise in the defense of a Proceeding, for all
reasonable Expenses incurred in the Proceeding if the Indemnified
Party was a party because Xx. Xxxxxxx is or was a director and/or
officer of AQM.
(b) AQM shall also indemnify the Indemnified Party against Liability
incurred by the Indemnified Party in a Proceeding the Indemnified
Party was a party to because Xx. Xxxxxxx was or is a director and/or
officer of AQM, unless Liability was incurred because Xx. Xxxxxxx
breached or failed to perform a duty that he owes to AQM and the
breach or failure to perform constitutes any of the following:
1. A willful failure to deal fairly with AQM, Inc. or its
shareholders in connection with a matter in which Xx. Xxxxxxx
has a material conflict of interest.
2. A violation of the criminal law, unless Xx. Xxxxxxx had
reasonable cause to believe that his conduct was lawful or no
reasonable cause to believe that his conduct was unlawful.
3. A transaction from which Xx. Xxxxxxx derived an improper
personal profit.
4. Willful misconduct.
(c) Determination of whether indemnification is required under this
Section 2 shall be made under Section 5 of this Agreement.
(d) The termination of a Proceeding by judgment, order, settlement or
conviction, or upon a plea of no contest or an equivalent plea, does
not, by itself, create a presumption that indemnification of the
Indemnified Party is not required under this section.
3. ALLOWANCE OF EXPENSES AS INCURRED. Upon written request by an
Indemnified Party who is a party to a Proceeding, AQM shall pay or reimburse the
Indemnified Party's reasonable Expenses as incurred if the Indemnified Party
provides AQM with all of the following:
(a) Written affirmation of the Indemnified Party's good faith belief
that Xx. Xxxxxxx has not breached or failed to perform his duties to
AQM.
(b) A written undertaking, executed personally or on behalf of the
Indemnified Party, to repay the allowance and to pay interest (at an
interest rate equal to the rate then currently paid by AQM on borrowed
funds) on the allowance to the extent that it is ultimately determined
under Section 5 of this Agreement that indemnification under Section 2
of this Agreement is not required and that indemnification is not
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EXHIBIT 10.19
ordered by a court under Section 4 of this Agreement. The undertaking
under this Section shall be an unlimited and unsecured general
obligation of the Indemnified Party.
4. COURT-ORDERED INDEMNIFICATION.
(a) An Indemnified Party who is a party to a Proceeding may apply for
indemnification to, or for a review of an adverse determination under
Section 5 of this Agreement by, the court conducting the Proceeding or
to the Circuit Court for Milwaukee County, Wisconsin and shall be
entitled to indemnification as hereinafter provided in Section 4 (b).
(b) The Indemnified Party shall be entitled to indemnification if the
court determines either of the following:
(i) That the Indemnified Party is entitled to indemnification
under Section 2 of this Agreement. If the court also determines
that AQM unreasonably refused the request for indemnification,
AQM shall pay the Indemnified Party's reasonable Expenses
incurred to obtain the court-ordered indemnification.
(ii) That the Indemnified Party is fairly and reasonably entitled
to indemnification in view of all the relevant circumstances,
regardless of whether indemnification is required under Section 2
of this Agreement.
5. DETERMINATION OF RIGHT TO INDEMNIFICATION. The Indemnified Party
shall select one of the following means of determining his or her right to
indemnification:
(a) By a majority vote of a quorum of the Board of Directors of AQM
consisting of directors who are not at the time parties to the same or
related Proceedings. If a quorum of disinterested directors cannot be
obtained, by majority vote of a committee duly appointed by the Board
of Directors of AQM and consisting solely of two or more directors who
are not at the time parties to the same or related Proceedings.
Directors who are parties to the same or related Proceedings may
participate in the designation of members of the committee.
(b) By independent legal counsel selected by a majority vote of a
quorum of the Board of Directors or its committee in the manner
prescribed in (a) above or, if unable to obtain such a quorum or
committee, by a majority vote of the full board of directors,
including directors who are parties to the same or related
Proceedings.
(c) By a panel of three arbitrators consisting of one arbitrator
selected by those directors entitled under (b) above to select
independent legal counsel, one arbitrator
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EXHIBIT 10.19
selected by the Indemnified Party and one arbitrator selected by
the two arbitrators previously selected.
6. ADDITIONAL RIGHTS. In addition to the specific rights to
indemnification set forth herein, the Indemnified Party shall be
entitled to such additional rights to indemnification as may from time
to time be provided or permitted under AQM's Certificate of
Incorporation or by-laws or the general business corporation laws of
Delaware or Wisconsin; provided, however, that no provision under any
of the foregoing shall serve to diminish any rights of indemnification
otherwise specifically granted under this Agreement.
7. MISCELLANEOUS MATTERS. This Agreement shall be governed by the
laws of the State of Wisconsin, may only be amended by written
instrument signed by Xx. Xxxxxxx and AQM and shall inure the benefit
of and be binding upon the parties and their heirs, personal
representatives, successors and assigns; provided, however, that no
assignment by operation of law or otherwise shall relieve a party of
its obligation hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
AQUA-CHEM, INC.
/s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxx Xxxxxx
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Xxxxxxx X. Xxxxxxx
By: /s/ Xxxxx X. Xxxxxxxxx
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